Creating a database of social enterprises in India

By Varun Bhandari.

At Sattva, Matt and I were asked to create a database of social enterprise firms for Indian social impact investors. This database would give investors information about a firms target market, kind of products they produce, social impact, and numerous other dimensions. This database would help determine if investing in a social enterprise would yield financial and social returns. After laying down key points that we felt constituted what a social venture is, we sorted out the non-social enterprises from the data we had. We then began to put together this database of social enterprises and research the missing qualitative social impact data. The most difficult task we faced was how we were going to incorporate the microfinance sector into our database.

For those who are not very familiar with the microfinance sector, microfinance is one of the biggest success stories in the Indian financial services sector. Many international investors eagerly invested in this quick-growing business sector. After receiving praises for about a year, however, microfinance organizations began to be criticized and accused for defrauding the poor by charging them exorbitant interest rates. There were even cases of the poor who committed suicide due to their inability to repay the loans. Due to this fallout, we were unsure if we should include the microfinance firms in the database which we were creating or if we should just ignore them completely.

After segregating the social and non-social enterprises and profiling the social ventures, we thought it would be unjust to just ignore the microfinance sector completely. A lot of firms in this sector, such as Guardian and Grameen Koota, are bringing about social changes and reforms that could help the poor in both rural and urban (Tier 3,4,5 cities) settings. Also, microfinance organizations do some unique things. For example Grameen Koota and Accion partnered to provide entrepreneurship education to female loan recipients going beyond a simple loan relationship. They have reached close to 1500 women in this small program. That said, the scale and multiplicity of microfinance interventions is large enough, that it dwarfs what many nascent social enterprises have achieved to date.  Hence, we felt the safest and most effective way to capture these two similar yet highly dynamic sectors would be to construct 2 databases – one captures non-financial social ventures while the other captures the the microfinance sector.

We were given access to social impact investment data. For example, we saw that firms that helped people have access to financial services was very different for both sectors – a total of USD 48.8 million was invested in the social venture firms whereas microfinance firms had received a total of USD 570.22 million. Because of the size and uniqueness of this sector, we decided to analyze financial services separately.

Can we include firms in the microfinance sector in a database for Social Enterprises? Well, I believe we can say that there are microfinance firms that cater to social needs and can be called social enterprises but including them in a database with non-microfinance firms would not be a wise choice. Creating separate databases is what we saw as an efficient and effective way to conduct further analysis. However, I know that different people view things differently and it would be interesting to see what people would have to say on how they may have approached this project otherwise. Any and all thoughts are welcome.

This entry was posted in Global SE 2012, Program, Students, Voices and tagged , . Bookmark the permalink.

1 Response to Creating a database of social enterprises in India

  1. Garima Sharma says:

    Hi Varun,

    I am a PhD candidate in org behavior at Case Western Reserve Univ, Ohio. For a research project I am interested in knowing more about the database of soc enterprises in India, that you mention in this post. Will you be able to share some more details on this?

    Thanks,
    Garima

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